Oil Price Hits $118

Talks among Organization of Petroleum Exporting Countries (OPEC) broke down yesterday without an agreement to raise output after Saudi Arabia failed to convince the cartel of boosting production.

'Unfortunately we are unable to reach a consensus to reduce or raise production,' OPEC Secretary General Abdullah El-Badri told reporters.

'This is one of the worst meetings we have ever had,' said Saudi Oil Minister Ali al-Naimi.

Mr. Naimi said six countries in the 12-member group were opposed to an increase in output.

He said Gulf Arab countries had proposed an increase to 30.3 million barrels a day, compared to current supply of about 29 million bpd, including Iraq, which is not bound by an OPEC quota.

El-Badri said the effective decision was no change in policy but he expressed the hope that OPEC would meet again in three months' time.

The next OPEC meeting would be on December 14.
Failure to reach an agreement will be a blow for industrialized consumer countries who were expecting OPEC to take action to stem fuel inflation. No date has been set for another meeting.

Brent crude rose $1.64 a barrel to $118.42.
Gulf Arab delegates said Iran, Venezuela and Algeria were among those who refused to consider an output increase.

Non-Gulf delegates said Saudi Arabia had proposed an increase on top of April supplies that was too high for them to contemplate.

Earlier in the week, a Gulf official said Saudi was already raising output by at least 500,000 barrels per day to 9.5-9.7 million barrels per day.

Forecasts suggest more oil is required to stop oil prices rising again.

OPEC's Vienna secretariat sees demand in the second half of the year 1.7 million barrels per day higher than current cartel output.